95 Percent of New Products Fail. Here Are 6 Steps to Make Sure Yours Don't

Here's the tried-and-true formula for a successful product launch. The future of your business may depend on it.

According to Harvard Business School professor Clayton Christensen, there are over 30,000 new products introduced every year, and 95 percent fail. According to University of Toronto Professor Inez Blackburn, the failure rate of new grocery store products is 70 to 80 percent. This is incidentally about the same success rate I had dating girls in college (my process was clearly flawed).

This brings us to the matter at hand. Why do products fail so frequently? From New Coke in 1985 to Kohler's recent attempt at a $5,000 AI-enabled toilet that tracks "movements", history is riddled with poorly conceived and launched products.

To develop, launch and gain adoption of a successful product requires the perfect formula of innovation, perspiration, calculation and luck. So why is product development so difficult? It comes down to a lack of resources. To develop successful products requires investment. Many principles that apply to developing physical products also apply to the creation of new services and software.

Here are six keys to developing new products:

1. Solve real problems.

At its core, all innovation occurs as a result of solving the most fundamental problems. This requires reverse engineering of how people or businesses consume things. The most prolific product designers such as those at IDEO follow people around and watch how they brush their teeth and use shopping carts.

Such is the level of understanding required to identify differentiated and valuable features. To identify the most relevant features, consider every step in the usage of a product or service. In the case of business services it may be useful to conduct a value chain analysis.

Truly understanding the voice of the customer is critical. The most sophisticated marketers have user groups, customer advisory boards and other methods for gathering data before diving into concept design.

2. Adopt a custom product development methodology.

There is a lot of debate about which product development methodology works best, but the answer varies by industry and company. Stage-gate approaches are structured and require careful deliberation before a product moves from one gate to the next. Agile is broadly utilized in software development but can be problematic in other industries that require more calibrated product releases.

For example, products sold at retail typically need to be approved six to 12 months in advance with no deviation on release dates, and other departments such as production may not be able to adapt as readily as a development team. Failure to set expectations can lead to a lot of corporate disruption.

Establish a product development methodology that works for your business and is embraced by the entire management team.

3. Nail down the key assumptions from the beginning.

Many product launches are late because decisions are made at the eleventh hour. This is because key assumptions about the product are often flawed, and not challenged until it's too late.

Be intentional about assessing materials and labor costs, legal implications such as trademarks, target price points and target channels from the beginning.

4. Insist on painstaking coordination with stakeholders.

Another flaw in product development is that most small companies only have one or two people involved with incubating an idea. There is often a lack of coordination across departments such as marketing, sales and production from the onset. Marketing is often introduced to an idea long after the development begins, though marketers may have had useful insight on everything from design to utility.

Regardless of your chosen process, it's important to gain the right stakeholders' input from the beginning and agree on the nonnegotiable tenants of the product, deployment of resources and timing of the project.

5. Take a long-range view of your product roadmap.

Too many companies think of product releases in one-year increments. By definition, if multiple products are in phases, they should be in various phases of development. Companies must pre-plan capacity, marketing spend and other variables. Establish a multiyear roadmap.

6. Have an appropriate cadence.

A dilemma for many marketers and developers is that they are rushing to release too many products at the same time. This dilutes the quality of their new products and product launches. Such dilution is a function of the following:

Limited internal resources, leading to less focus on producing and launching the best possible product.

Limited customer adoption, as customers can only absorb so many products at the same time.

Less time to evaluate the success of products and what tweaks may be needed for future products.

Be thoughtful about product development. Your company's future could be at stake.